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March 6, 2021
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Business Review Western MI
Business Review Western MI
Insuring the Future?
(wgvu) - In offering an analysis that identifies the insurance industry as a key
driver of job creation in Michigan, a coalition hopes to thwart
consideration of raising taxes on policy premiums.

Plans floating around Lansing to replace the Single Business Tax have
targeted the insurance industry for higher taxes. One proposal would
raise the premium tax from the current 1.07 percent to 1.25 percent and
eliminate existing credits and exemptions.

Doing so would not only drive up premiums for consumers up but make
Michigan less competitive at a time when other states are nurturing the
sector to grow jobs, the Michigan Insurance Coalition argues.

The industry-commissioned analysis by GSP Consulting Corp. makes the
case against higher taxes on insurance. It cites a prediction that
industry employment will grow nearly 10 percent in the decade from 2004
to 2014.

Increasing the tax burden on a sector of the economy that is growing
and creating jobs goes against the grain of insuring for Michigan's
future, coalition President James Miller said.

If a 1.25 percent premium tax were adopted, it could increase the tax
burden for a western Michigan-based insurer, Hastings Mutual Insurance
Co., by up to 40 percent, vice president and general counsel Michael
Puerner said.

That kind of effect could hurt the business climate in Michigan for
insurers and cause Hastings Mutual, and presumably others, to focus more
on growing in other states.

It would put pressure on our ability to grow in Michigan, and it would
increase our emphasis on diversifying our book of business
geographically in other states, Puerner said.

Hastings Mutual, with premium revenues of $282.7 million in 2006, has
some 200,000 policies in Michigan, Ohio, Indiana, Illinois and
Wisconsin. More than 53 percent of the policies are in Michigan, where
about 300 of the company's 430 employees work at the Hastings headquarters.

The Michigan Insurance Coalition's intent with the study, released last
week, is to show that despite Michigan's lagging economy, there are
bright spots where industries are growing and creating jobs, and
insurance is one of those bright spots, Miller said.

The industry's stance illustrates the difficulty in creating a new
business tax system. As some advocate for broadening the tax base
through taxing services, others say it makes no sense to target sectors
that are sustaining and creating much-needed jobs.

The coalition hopes lawmakers and the governor will create a system
that encourages growth and investment without penalizing the very
industries that are keeping Michigan's economic ship afloat, Miller said.

While industry advocates assert it pays its fair share of taxes, a
report issued in February by a state panel that examined Michigan's
fiscal crisis states otherwise and suggested the state consider
broadening its tax base to more closely reflect economic realities of
an economy that's increasingly service-sector driven.

It is not fair that some activities and businesses currently enjoy
lower taxes, such as the insurance industry, or exemption from taxes,
while individuals and other businesses bear a disproportionate share of
the tax burden, the bipartisan Emergency Financial Panel reported.
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